Trump’s Lawyers Seek Resolution of His $10 Billion Lawsuit Against the IRS and Treasury

No president in American history has sued the agencies he controls for a $10 billion payout while simultaneously overseeing the officials who will decide whether taxpayers foot the bill. Donald Trump is attempting to do exactly that and his lawyers are now asking a federal court for 90 days to quietly work out a settlement.

In a court filing submitted Friday, lawyers for Trump, his sons Eric Trump and Donald Trump Jr., and the Trump Organization asked a judge to pause the lawsuit while the two sides engage in settlement discussions. The filing was made with the IRS’s own consent a detail that underscores the fundamental oddity at the heart of the case: the plaintiff is the President of the United States, and the defendants are agencies he directly controls.

“The parties are engaging in discussions,” the filing stated, “and need time to work through how to ensure those discussions can take place productively to avoid protracted litigation.”

The Leak That Started It All

The lawsuit traces back to one of the most significant breaches of taxpayer confidentiality in IRS history.

Charles Littlejohn, a technology contractor employed by Booz Allen Hamilton and working inside the IRS, systematically stole private tax data belonging to Trump and more than 400,000 other Americans between 2018 and 2020. He deliberately took the IRS job with the intention of obtaining the information, according to prosecutors. He then leaked Trump’s records to The New York Times and a separate trove of wealthy Americans’ data to ProPublica.

The consequences for Littlejohn were severe: he pleaded guilty in October 2023 and was sentenced to five years in federal prison the statutory maximum plus three years of supervised release and a $5,000 fine. He is currently serving that sentence.

The consequences for the public were also significant. The 2020 New York Times report revealed that Trump paid just $750 in federal income taxes the year he entered the White House and paid no income tax at all in several prior years, citing massive business losses. The ProPublica data showed the 25 wealthiest Americans legally paid a smaller share of their income in taxes than many ordinary workers.

The $10 Billion Question

Trump filed the lawsuit in January 2026, demanding $10 billion in damages from the IRS and Treasury Department, arguing the agencies failed to maintain “appropriate technical, employee screening, security, and monitoring” protocols that would have prevented the theft. The figure $10 billion immediately raised questions about its legal basis, since courts award damages tied to demonstrable harm, and the connection between the leak and $10 billion in provable injury has not been publicly established.

What has been established is the structural problem: Trump is negotiating a settlement with Treasury Secretary Scott Bessent, an official he appointed, who works for him, over money that would come from the U.S. Treasury funded by American taxpayers. No independent arbiter sits between the two sides. The president of the United States is, in effect, negotiating with himself.

Fortune confirmed that Trump’s lawyers are directly in talks with Bessent’s IRS. The Washington Post reported that agencies are in talks with Trump and his family to resolve the suit.

Congress Sounds the Alarm

Democratic senators have not let the arrangement pass without challenge.

Senate Finance Committee Ranking Member Ron Wyden and Sen. Elizabeth Warren sent a letter to Bessent and Attorney General Pam Bondi in February demanding to know whether they intended to defend American taxpayers or enrich the president with a taxpayer-funded payout.

“The conflict of interest for Trump’s underlings at the Treasury Department, IRS, and DOJ is enormous,” Wyden said in a statement. “The powerful and unstable guy they work for is suing the agencies they lead and they’re in charge of deciding whether the American taxpayer will be on the hook to pay up.”

Wyden and Democratic Leader Chuck Schumer responded by introducing the Stop Presidential Embezzlement Act legislation that would impose a 100% tax on any settlement received by a sitting president, vice president, cabinet member, or member of Congress as a result of a lawsuit filed against the government while in office. The bill has not advanced through the Republican-controlled Senate.

On April 15, Wyden issued a second statement blasting IRS Commissioner Frank Bisignano and the administration’s broader handling of the agency, calling it “corrupt and incompetent.”

The Precedent Problem

Legal scholars have flagged the case as unprecedented on multiple levels. NBC News analysis noted bluntly that the lawsuit could “go sideways” in several directions either through a settlement that triggers a constitutional challenge, a court ruling on the conflict-of-interest question, or congressional intervention.

NPR’s framing was equally direct: “Trump Would Like the Government He Leads to Pay Him Billions.”

The 90-day pause request, if granted, would push any resolution to mid-July at the earliest past the expiration of the Iran ceasefire, past the midterm primary season, and well past the point at which public attention is likely to focus on the case.

Kiplinger noted the lawsuit had already injected fresh uncertainty into the 2026 tax season, raising questions about IRS institutional independence at a moment when the agency is already under intense political scrutiny from both parties.

Whether $10 billion, a lesser sum, or nothing ultimately changes hands, the case has already demonstrated something money cannot easily quantify: a sitting American president negotiating a billion-dollar payout from agencies he controls is a constitutional novelty no legal framework was designed to cleanly handle.